Purchasing a tax sale property in Ontario
Purchasing a tax sale property in Ontario requires knowledge, experience and legal advice from Ontario’s real estate lawyer specializing in Municipal tax sale properties.
Purchasing a tax sale property in Ontario can be very profitable or your worst nightmare. Professional real estate investors prefer to take proper training and coaching in class and field before purchasing a tax sale property in Ontario.
Here are the basics and important definitions and points to be taken into consideration when deciding to purchase a property through the Ontario tax sale.
Cancellation Price means an amount equal to all the realty tax arrears owing on a parcel of land at any time in respect of land together with all current realty taxes, interest, penalties, and reasonable costs incurred by the City.
Tax Deed is a tax deed, as prescribed by Section 379 of the Act, provided to the successful purchaser of the property after payment of the balance of the tendered bid price and is registered on title in the Land Registry Office transferring the ownership of the property to the successful purchaser.
Notice of Vesting means a notice prepared under Section 379 (15) of the Act conferring title to the City where there has been no successful tender of a parcel of land and the sale has not been cancelled by the City Treasurer.
Crown Interest is an interest in a property in favor of the government of Canada or government of Ontario. It is important to know if there are any Crown interests in a property that is being sold through the public tax sale process. This interest will remain with the property even after a tax sale.
Examples of Crown interests are as follows:
- Canada Revenue Agency (CRA) Taxman
- Income Tax Act
- Retail Sales Tax Act
- Minister of Finance
- Business Development Bank
- Farm Credit Corporation
Execution Search is a search in the Sheriff's Office of judgments that have been issued by a court of law against the property owner. If the Execution Creditor is not the "Crown", the execution will not affect the property after the tax sale. If the Execution Creditor is the "Crown" the judgment will remain with the property.
Title Search is a search of the records on title to a particular parcel of land in the Land Registry Office. A title search will reveal vital information about the property, including, but not limited to, who owns the property, what mortgages, easements, and restrictive covenants may affect it, and if there are any surveys registered on title.
Land Transfer Tax is a tax that must be paid when land is sold and payable to the provincial government. The land transfer tax must be paid into the City together with the balance of the tendered bid amount if you are the successful purchaser.
The tender package is a collection of forms and information about the properties that are listed for sale by public tender. Most tender packages may include information such as:
- Roll number applicable to property,
- Legal description,
- Assessed value of each property,
- Annual taxes levied,
- Zoning information
- GIS Map which will illustrate where the property is located, size of the property
- Digital photo (if available)
Tender packages will also include the forms that you will need to submit a tender. These forms are:
- Form 7 – Tender to Purchase
- Envelope Template
- Tax Sale Information Bulletin
Points to Consider:
- A separate tender must be provided for each parcel bid on and must be on the form provided (Form 7) and must be completed in ink or typewritten. No substitutes can be accepted.
- The tender must be accompanied by a deposit of 20% of the tendered bid amount by way of money order, bank draft or certified cheque payable to the CITY or the City.
- The Treasurer is under no obligation to determine the value of the land before conducting said sale. The City does not conduct tours or provide access to the properties being sold.
- The City is not responsible to provide a survey or reference plan for any parcel offered for "tax sale" or responsible for the condition of the property. The GIS map, provided as a courtesy, are not surveys and may be used for approximate location purposes only.
- The City is not required to provide vacant possession of any properties should the purchaser require vacant possession. Further the City DOES NOT have a key to the property and is not in possession to provide one to the purchaser.
- The City is not responsible for insuring property to protect any interests of the tenderer.
- The City does not provide legal opinions to potential bidders in respect of issues which may arise in the context of a public sale. If two bids of equal amount are tendered, then the person who submitted the earlier bid will be deemed to be the higher bid.
- The minimum bid is the Cancellation Price.
- If no bid or no bid equal to or greater than the cancellation price is received, the City has the option to receive title to the land by registering a notice of vesting.
- All tenders including the successful tender are subject to the treasurer's discretion to cancel the tax sale at any time until a tax deed is registered pursuant to the Municipal Act, 2001 s.382 (6) without any recourse by the successful bidder or any other bidder against the City.
- A tender may be withdrawn if the tenderer's written request to have the tender withdrawn is received by the treasurer's office before 3:00 pm on the last date for receiving tenders. The envelope containing the withdrawn tender shall only be opened at the time of the opening of the sealed envelopes and returned thereafter.
- If you have submitted a bid and the property has been cancelled from the sale, you will only receive your bid document and deposit after the tender has closed and the bids are opened on the specified opening date.
- The highest bidder is the successful purchaser if the purchaser pays the accumulated taxes, any costs incurred by the City, the land transfer tax, HST. (if applicable) and the sale price (which must be equal to or greater than the cancellation price).
- If the successful bid fails to pay the balance of the cancellation price, the 20% deposit is forfeited to the City
- Then, the second highest bidder will be the successful purchaser and given the opportunity to pay the balance of the cancellation price within the specified time. Upon compliance, the second highest bidder will then be officially declared the successful purchaser.
- The payment must be in CASH, and must be made within fourteen days from official notification by the City of the sale. The Municipal Act defines "CASH" to be "money order or bank draft or certified cheque drawn on a bank, trust company.
- The accumulated taxes refer to any additional charges, taxes and/or interest and penalty that have been incurred beyond the first advertisement date of the cancellation price to the public tender.
- The City makes no representation regarding the title to or any other matters on the land to be sold. Responsibility for ascertaining these matters thru a title search or execution search (Land Registry Office, Sheriff's Office, etc.) rests with the potential purchasers.
The following departments/agencies may be in a position to provide assistance in respect of the tax sale property:
Zoning & Development Information – Dept. of Planning, Parks & Recreation Services
Work Order Information – Building Permits & By-law Enforcement Division
Fire Department – Fire Prevention Division
Service Ontario (Land Registry Office)
Municipal Property Assessment Corporation (MPAC) – 1-800-296-6722 FREEor www.mpac.ca
- Professional real estate investors or the buyer must have legal advice in writing prior to bidding on any tax sale properties; this decision is at your own discretion.
The potential bidders are further advised that legal counsel should be retained in order to ensure that his/her interests are protected if the tendered bid is declared the highest bid and subsequently is declared the successful purchaser once the balance of the purchase price has been submitted.
- The onus is on the potential Professional real estate investors or the buyer to conduct his/her own investigation into such matters as zoning, work orders, water/hydro arrears, future development possibilities, building restrictions or title problems, etc. The City makes no representations as to the quality and/or quantity of the land being sold.
A tax deed which is provided to the successful purchaser transfers title of the land in "fee simple" and is subject to the following:
- all rights, privileges, and appurtenances. e.g. right-of-way
- easements and restrictive covenants that run with the land
- interests of the Provincial or Federal Crown
- claims of adverse possession by abutting landowners
Get more information from the city if required
Send us your request in writing to the city address, leaving your your name, address, telephone number
Professional real estate investors will do lot more due diligence before purchasing Ontario tax sale property. You can learn more by attending LIVE Canadian real estate investors training at www.Flipping4Profit.ca
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